Legal Framework of Regulation of Banks in India

The Banking Regulations Act, 1949 and Reserve Bank of India Act, 1934, mainly govern banking in India. The Reserve Bank of India and the Government of India exercise control over banks from the opening of banks to their winding up by virtue of the powers conferred under the above statutes.

RBI Guidelines

· Banking is defined in section 5(b) of the Banking Regulation Act as the acceptance of deposits of money from public for the purpose of lending or investment. Such deposits may be repayable on demand or otherwise and withdrawable by check, draft order, or otherwise.

· Thus, a Bank must perform two essential functions: 1) Acceptance of public deposits, and 2) Lending or investment of such deposits.

· Accepting deposits from “public” implies that a banker accepts deposits from anyone who offers money for such purposes. However, a banker can refuse to open account for undesirable persons and further, the opening of accounts is subject to certain conditions like proper introduction and identification.

· The “Know Your Customer” guidelines issued by the Reserve Bank of India require Banks to follow certain customer identification procedures for opening of accounts for protecting the banks from frauds, etc., and also for monitoring transactions of a suspicious nature for the purpose of reporting to appropriate authorities for taking anti money laundering measures and combating financing of terrorism.

Deposits Withdrawable by Check

· Under section 49a of the Banking Regulation Act, no organization other than a bank is authorized to accept deposits withdrawable by check.

· The Saving Bank Scheme run by Indian government, a primary credit society and may other person or firm notified by the government are exempted from this prohibition.

Acceptance of Deposits by Non- Banking Entities

· There are also non-banking companies, firms and other unincorporated associations of persons and individuals who accept deposits from the public.

· Acceptance of deposits by non-banking financial companies is regulated by the Reserve Bank of India under the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 and other directions issued by it under Chapter 3b of the Reserve Bank of India Act.

· Other companies are regulated by the central government under the companies (Acceptance of Deposit) Rules, 1975 issued under Section 58A of the Companies Act, 1956.

· Individuals, firms and other unincorporated associations of persons whose business includes the business of financial institution or whose principal business is acceptance of deposits, is prohibited under section 45s of the RBI Act (as amended in 1997) from accepting deposits from the public, except relatives.

· This prohibition does not apply to acceptance of deposits by those who are mainly engaged in manufacturing or trading.

Banking License

· In India, it is necessary to have a license from the Reserve bank under section 22 of the banking regulation act for commencing or carrying on the business of banking.

· Every banking company has to use the word “bank” as part of its name (section 7 of the act) and no company other than a banking company can use the words “bank”, “banker”, “banking” or “banking company” as a part of the name or for the purpose of business.

· Subsidiaries of banks and association of banks in certain cases as also primary credit societies are exempted from this restriction.

Your question will also be posted as a public question in the Knoji forums, so be sure to phrase it as a general question that anyone could answer. Personal questions and private messages should be sent using the Message Me feature instead.

To maintain a high standard for new discussions started, each Knoji member is limited to a certain number of questions each day. Use your questions wisely, ask quality questions and you'll get quality answers.

Credits refresh at midnight US Central time, at which time you'll receive your next day's allotment of credits.

When people like the answers you provide, they make a public acknowledgement by placing a vote for your answer. The more votes you accumulate on Knoji, the higher you move up in rank. Increased rank gives you increased capabilities, more perks and more expert cred around the site.

We limit the number of questions members can ask on Knoji each day in order to improve the quality of questions and answers. Your question credits will reset each day at midnight US Central time, so come back then to ask more questions!

Contributors on Knoji are awarded Levels as they establish themselves as experts within the community. There are three ways in which users can increase their level, via writing articles or via answering questions, or both.

Your primary job as an Ambassador is to kick off thoughtful discussion threads around products, services. Your discussions can be on any topic in Knoji's category system. Here are some examples of the types of discussions you'll be starting:

Requests for recommendations for any type of product or service, examples:

People on Knoji ask questions seeking recommendations for products and services. We encourage our community members to answer questions whenever you can make a useful recommendation towards any request.

People on Knoji ask questions seeking recommendations for products and services. We encourage our community members to answer questions whenever you can make a useful recommendation towards any request.

When pointing to specific products, please link to specific product pages on Amazon.com or Walmart.com (Ambassadors: You earn increased rewards when doing this)

You should include screenshots of the products you recommend (Ambassadors: you earn increased rewards when doing this)

Try to recommend products that you've had personal experience with. If not, it is acceptable to recommend products or options based on thorough research you do online.

Asking questions

On Knoji, you can ask any question about any consumer or shopping-related topic. Many questions involve requests for recommendations for any type of product or service, examples:

To qualify as a working coupon, the link or code must provide a discount above and beyond what's freely available by default on the vendor's site.

To check this, first click the link and check that the coupon can be applied and does provide the discount described. Then, in a different browser, open the vendor's site (without using the Knoji link) and check whether that same discount is available to any user by default. If it's not, and the coupon works, then you've found a qualified coupon and can verify it and get your earnings. If not, you can verify that it does not work (explain why this is) and you'll earn a smaller credit.

Don't waste your time verifying invalid coupons! Before you receive payment, all your verifications will be reviewed, and if they are invalid, you earnings will be deleted. Verify only valid coupons in order to receive payment for this project.